Broad indexes attempted a bigger rally later in the afternoon session but couldn’t hold onto gains through SPY $159. We basically closed where we opened leaving a wake of choppy action throughout the day which most intraday traders had a tough time with. Folks, these types of environments lead to overtrading and forced situations. Newbie options traders will buy calls & puts to play breakouts/breakdowns but will only end up buying inflated premiums that lose value quickly once the fakeouts take place.

The Financial sector was the strongest today with Visa (NYSE: V) & some of the major financial institutions putting in a nice bounce from oversold levels earlier this week. I managed to scalp some half decent profits buying a few contracts in Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM), Bank of America (NYSE: BAC) & Citigroup (NYSE: C) as a basket trade. The intraday chart of Citigroup is important today because it definitely clued people in towards the possibility of a rally into the afternoon.

After the buying activity off the open lifted most stocks higher, this stock held up considerably well while other large-cap names were quick to give their gains back. The Tech sector especially had several names go back into negative territory despite impressive premarket gap ups. For example, Priceline (NASDAQ: PCLN) was up about 10 points immediately off the open and then went negative by 10:40 AM. With the strength in the Financials though, the market eventually found some legs and buyers came right back into these names.

There was room to come into this option off the dumps in the equity throughout the afternoon. Obviously the easiest money was straight off the open up until 11 AM. I hopped in during the afternoon where some selling pressure on the stock took this option under $.60. I was able to purchase 100 contracts and scalp out over $.70.

Many of you may be thinking to yourself this trading example above is not a typical setup that Sang Lucci would go for. Like I said in many of my posts this month, when the environment gets choppy, a trader must move towards scalping strategies or become a net seller of options.